Handheld Genius: What Can We Learn From the iPhone’s Success?

Handheld Genius: What Can We Learn From the iPhone’s Success?2017-09-052017-09-05https://www.vertoanalytics.com/wp-content/uploads/2019/03/verto_logo_rgb.pngVerto Analyticshttps://www.vertoanalytics.com/wp-content/uploads/2016/07/CEO-insights.png200px200px

For the tech community, September has evolved into a time of great anticipation: it signals what has become Apple’s annual iPhone event, when the company announces its newest line of smartphones. The company’s latest announcement, slated for September 12, offers an opportunity to ask a number of bigger questions: ten years after its initial release, why is whole world still fixated on the iPhone? Has the iPhone truly changed our lives in ways that are remarkable enough to deserve this attention? And cultural perceptions notwithstanding, is the iPhone really the “killer smartphone” when it comes to hard numbers and sales revenue?

One could posit that iPhone was the first smartphone, or that Apple was the company to create the concept of downloadable apps and the app store itself. There’s also the fact that the touchscreen – one of the key features of iPhone – has become the de facto means for interacting with smartphones and increasingly with other devices, too (as supported by Verto’s latest research on consumer interaction behaviors).

The iPhone and Apple Are Not Unique

However, none of these factors are unique to Apple. Less than twenty years ago, Nokia established itself as the first real giant in the smartphone world, selling over 100 million smartphones in 2010 alone – almost more than RIM (Blackberry), Apple and Samsung combined. Nokia’s two most popular feature phones have each outsold any single iPhone model to date: the Nokia 1100 and 1110 have each sold 250 million units per model. In the early 2000s, Nokia introduced touchscreens on select smartphone models, but scuttled this feature due to poor customer response. In 2001, they launched the first app stores, which served as places to download apps to Nokia Symbian S60 devices, before rolling out a unified Nokia Store for apps in 2009. Led by innovators like Anssi Vanjoki, Nokia also was the first to claim the title of biggest manufacturer of digital cameras and digital music players. And they were not alone in the market: before the introduction of the iPhone, Nokia faced competition from other smartphone vendors like Sony Ericsson and Samsung, who either used the Nokia Symbian/S60 operating system, or relied on their own platforms.

On a strictly financial and numerical basis, however, the iPhone has eclipsed Nokia’s previous accomplishments: by the end of the first quarter of 2017, 1,162,796,000 iPhones had been sold worldwide – more than any other mobile device brand, or any other brand within consumer electronics. Apple has already cracked a total of $744 billion in accumulated revenue through its iPhone sales, and this number is forecasted to surpass $1 trillion by mid-2018.

Apple’s User Base is Still Growing Faster than the Competition

So how strong is the iPhone today? While Apple is still a clear market leader in the U.S., it’s facing growing competition from Samsung, which boasts dozens of different smartphone device models across more price categories than Apple currently serves. But while Apple’s only smartphone offerings are confined to its relatively limited iPhone line, it still captures 37.2% of all smartphone users in the U.S., according to Q2/2017 Verto Watch data. All together, 80 million adults in the U.S. use iPhones in any given month, versus 62 million U.S. adults who use Samsung smartphones, and 18 million who use LG devices over the same time period. Other former device giants have experienced strong negative growth over the past decade: Blackberry’s monthly users are already below 1 million mark. In fact, among the big players, Apple has enjoyed the fastest user base expansion rate over the past 12 months; Apple’s user base has grown 12.7% year-on-year, versus 10.4% for Samsung, and 10.4% for LG. And while the U.S. smartphone user base is still growing, Apple has actually strengthened their market position since 2014, when we published our Device Ecosystem Report.

How has Apple managed to make the iPhone synonymous with smartphones, even for those of us who were loyal Nokia customers just a decade ago?

Six Cornerstones to Apple’s Success

I find myself frequently discussing this topic with other industry executives – in fact, the topic probably comes up two or three times per quarter. As a result, I have started recording my thoughts on the key reasons that contribute to Apple’s success:

Simplicity in branding and product: it is simple to understand what is the iPhone all about. There is only one flagship product available, and no different product families or brands to keep track of. Instead, there are a just a few options for customization and very small differences between form factors, memory sizes, and screen sizes, between device models in any given year.

Supporting a strong and streamlined ecosystem for the developer community: while Nokia devoted significant resources to establishing its developer communities, its Symbian/S60 development tools faced a lot of criticism. Different form factors, screen sizes, and the time it took to develop appealing consumer-facing apps or games all created barriers to developers trying to work within the Nokia ecosystem. Apple, meanwhile, has stuck to one form factor and a limited number of screen sizes, and from the start, they built intuitive and popular developer tools, which helped them win over the developer community. And as iPhones continue to grow their market share, the developer community has an ever increasing number of compatible devices that can use their apps, offering even more opportunities for monetization and growth.

Putting the everyday consumer first: Apple figured out the key to usability in ways that no other company has managed to do. Nokia, Samsung, and other smartphone makers have struggled with the contention that their devices are less easy to use, with clunkier user interfaces and designs.

Finding a balance between successful mass-market consumer product and “style signifier:” Apple is still reporting runaway sales figures for iPhones, but the company still holds a “premium” brand image: for many consumers, iPhones are an exclusive product and status symbol. Can Apple retain this balance moving forward? Apple also manages to maintain an almost unprecedented level of secrecy around its new devices. announcing new products and partnerships on its own terms. With recent collaborations with other luxury brands, who knows what else is in the works?

Right time, right features, right technology: Apple has a knack for introducing new devices with the right features and technologies, but only when they are ready for limelight. With a few rare exceptions, Apple does not rush to market with new features or hardware improvements, but instead ensures that the relevant technology is ready, works seamlessly, and does something meaningful for the consumer. Other device vendors push technologies, services, and features before they are fully tested, ready, or before the supporting infrastructure is available (consider mobile payments as a recent example).

An excellent distribution strategy: if executed well, having exclusive carrier deals allow device makers to control consumer choice and experience. Through its network of retail stores, Apple can speak to the consumer, and operate on its own terms when it comes to distribution channels, carrier collaborations, and physical ways to build its brand image and showcase products.

Will Apple’s current strategy continue to work, and and can the company hold on to its role as the leader in the developed markets over the next decade? I would say that they have a strong chance of being able to succeed, given their past track record. However, that will require adhering to the key principles outlined above, and being able to successfully innovate in new areas, such as a full expansion into new devices like wearables, the connected home, and IoT. Apple must also ensure that its ecosystem is powered by useful and widely applicable features – everything from mobile payments to navigation to ordering food to serving business needs more efficiently than ever. And of course, Apple must put the total user experience at the center – and this tenant must be embraced by the company’s individual executives and baked into the company culture in order for Apple to maintain its competitive edge.

Dr. Hannu Verkasalo has founded, built and sold several companies in the digital space. He has also advised more than twenty ventures across the U.S. and Europe and has had two successful exits (Menudata, Zokem). He led the mobile and online research arm for Arbitron acquired by Nielsen in 2011. Hannu holds a Ph.D in mobile analytics and holds master’s degrees in social science, engineering and economics.